China’s Aluminum Exports Surge to Fill Global Shortfall From War
(Bloomberg) -- Chinese aluminum exports surged in May, helping fill a global shortage caused by war in the Middle East. Crude oil imports continued to slump, dropping to an eight-year low, as the conflict chokes shipments from major producers.
Outbound cargoes of aluminum climbed 16% from the previous year to 630,000 tons, according to customs data on Tuesday. Smelters in the world’s biggest producer have maximized output to capture more international sales, after the war halted supplies from a key producing region and rallied prices.
The damage to export facilities and severe constraints on vessels in the Persian Gulf continued to curb oil and gas purchases from the region. China’s total crude imports plunged 29% to 33.1 million tons, the lowest since February 2018, while gas imports were flat at 10.1 million tons.
Oil refiners are cutting fuel output rather than jostle for alternative sources of crude, a sign of dwindling long-term demand. Product exports fell 24% in May to 3.37 million tons, although the figure was slightly higher than April after China allowed some shipments to relieve shortages in nearby countries.
Chinese buyers of liquefied natural gas, however, are tapping other suppliers to make up for lost deliveries from Qatar, pressured by the onset of peak summer demand.
Purchases of coal, which competes with gas, remained subdued, dropping 7.7% to 33.3 million tons. China’s vast reserves have capped demand for pricier imports, although the impact on production from the Shanxi coal disaster could change that calculation in coming months.
The Strait of Hormuz is also a chokepoint for global fertilizer shipments. To conserve domestic supplies, China has responded by tightening controls over its exports, which fell 5.5% to 2.97 million tons. Steel exports also moderated by 2.2% to 10.3 million tons as the war’s inflationary pressures have made overseas buyers more cautious, according to Mysteel.
Among commodities imports less directly affected by the war, copper metal rose 4.4% to offset the impact of seasonal maintenance at domestic smelters, while copper ore dropped 1.4%. Iron ore imports eased 0.4%.
Soybeans fell 15% in May, although the figure was much higher than April as more US cargoes cleared customs alongside Brazilian supplies following the trade truce with Washington.
On the Wire
China’s exports and imports expanded at a faster pace in May, topping forecasts as booming demand for artificial intelligence hardware offsets disruptions from the war in Iran.
The drag from domestic demand on China’s economy extended in May, according to Bloomberg Economics. Indicators point to continued weakness in momentum, with soft consumption and housing sales outweighing firmer export-related activity.
The Pentagon accused some of China’s biggest companies including Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. of supporting the Chinese military, doubling down on an earlier decision to label crown jewels of the country’s corporate world as threats to US national security.
Namibian uranium mines, which supply nuclear fuel to their Chinese owners, are maintaining output targets despite soaring sulfuric acid costs as a result of the US-Iran war.
This Week’s Diary
Tuesday, June 9
- China’s May trade balance and 1st batch of trade data, ~11:00
- Crude oil, natural gas & coal imports; oil products imports & exports
- Iron ore, copper & steel imports; steel, aluminum & rare earth exports
- Soybean, edible oil, rubber and meat imports; fertilizer exports
- China to release May aggregate finance & money supply data by June 15
- Coaltrans China in Beijing, day 1
Wednesday, June 10
- China’s inflation data for May, 09:30
- CCTD’s weekly online briefing on coal markets, 15:00
- Coaltrans China in Beijing, day 2
Thursday, June 11
- China’s monthly CASDE crop supply-demand report
- Coaltrans China in Beijing, day 3
- EARNINGS: Chow Tai Fook
Friday, June 12
- China’s weekly iron ore port stockpiles
- SHFE’s weekly commodities inventory, ~15:30
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